Recent Cases Highlight the Importance of Service Provider Agreement Legal Review

November 6, 2019
Hall Benefits Law, LLC

According to Section 104(b)(4) of ERISA, your benefits administrator may receive periodic written requests for “a copy of the bargaining agreement, trust agreement, contract, or other instrument under which the plan is established or operated.” Service provider agreements are typically long and complicated documents. They can be confidential in nature. These documents are critical in disputes over the plan’s administration, and failure to provide appropriate information to plan participants on request can mean facing stiff ERISA penalties. So what’s a plan administrator to do?

Service Provider Agreements Generally Don’t Govern the Plan

Service Provider Agreements don’t govern the plan and its relationship between the plan participant and the plan provider. For this reason, many courts do not require that these documents be disclosed when requested. For example, recent decisions in both New Jersey and the Ninth Circuit ruled that there was no penalty for refusing to provide documents that did not describe plan terms, its financial status, or otherwise govern the plan.

However, the Seventh Circuit found that administrative agreements such as Service Provider Agreements should be disclosed as they identify the authority of the plan provider with respect to a particular plan. Other courts have simply found that there may be times when the terms could impact a participant’s rights.

Legal Review of Agreements

In light of these conflicting and somewhat unclear rulings, one thing is clear – employers need legal review of their benefit plan service provider agreements to determine whether their terms could be construed as governing the plan or not and whether disclosure of the document is required. In particular, the Eastern District of Missouri determined that, although these agreements are not formal plan documents, they do memorialize obligations between parties and show the level of discretion and authority the service provider has over the plan.

The experienced benefits attorneys at Hall Benefits Law counsel plan administrators with regard to requests from plan participants. We also help plan providers, administrators, and service providers craft and update documents to meet the current laws. Learn more about what we do by calling 678-439-6236 or visiting the Hall Benefits Law website.

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Hall Benefits Law, LLC

HBL offers employers comprehensive legal guidance on benefits in mergers and acquisitions, Employee Stock Ownership Plans (ESOPs), executive compensation, health and welfare benefits, healthcare reform, and retirement plans. We counsel a wide spectrum of clients including small, mid-sized, and large companies, 401(k) investment advisors, health insurance brokers, accountants, attorneys, and HR consultants, just to name a few. HBL is passionate about advising clients, and we are dedicated to our mission: to provide comprehensive, personalized, and practical ERISA and benefits legal solutions that exceed client expectations.

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